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European and Mediterranean Conference on Information Systems 2009 (EMCIS2009)

July 13-14 2009, Crowne Plaza Hotel, Izmir

VALUE CHAIN OF HALAL CERTIFICATION SYSTEM: A CASE


OF THE MALAYSIA HALAL INDUSTRY

Nurulhuda Noordin, Faculty of Information Technology and Quantitative Sciences,


Universiti Teknologi MARA, Malaysia huda.noordin@yahoo.com
Nor Laila Md Noor, Faculty of Information Technology and Quantitative Sciences,
Universiti Teknologi MARA, Malaysia norlaila@tmsk.uitm.edu.my
Mardziah Hashim, Faculty of Information Technology and Quantitative Sciences, Universiti
Teknologi MARA, Malaysia mardziah@tmsk.uitm.edu.my
Zainal Samicho, Faculty of Applied Sciences, Universiti Teknologi MARA, Malaysia
zaisam@yahoo.com

Abstract
The Malaysian Standard Halal Food (MS1500:2004) has been cited by Codex Alimentarius
Commission as the best example in the world in terms of justification of Halal food. As Malaysia is
positioning itself to be the Halal food hub center by 2010, Malaysia needs to act fast to strengthen the
Halal certification services. The Malaysia government has appointed the Halal Industry Development
Corporation (HDC) as a body to handle local and international Halal certification process. Due to the
rapid growth of the Halal industry, it is important to research on the Halal certification because the
Halal certificates and logos are the important elements in gaining global market shares and retaining
consumers.
The objectives of this study are to (1) provide an understanding of Halal certification system in
Malaysia and (2) highlight issues on the Halal certification process from a value chain analysis
perspective. The study adapted a value chain analysis approach to determine the Halal certification
process, the actors, information of Halal and so forth. In this value chain analysis, semi-structured
interview and document review are conducted. The open-ended questions such as how, what, when,
where, and why are used in this study. The interview involved three experts in the Halal certification
process. The three personals were considered expert in the Halal certification process as they were
credible and have been given authority by the Malaysian government. The documents such as Halal
Manual Procedures, Malaysian Standard Halal Food (MS1500:2004), magazines and newspapers
articles, journals and so forth are the prime sources in this study.
The results of this study reveal (1) the related agencies and acts of Halal certification system, (2) the
current state of Halal Certification and (3) the issues of Halal certification system in Malaysia. The
first issue of Halal certification system in Malaysia is inefficiency of Halal certification process.
Second issue is conflict of authority and governance between federal government and state
government. The findings are important in developing Halal Ecosystem and also provide motivation
for researcher to resolve the issues by providing more focus in niche area. .
Keywords: Halal Certification System, Halal Industry Development Corporation (HDC), Value Chain,
Halal Governance

1 INTRODUCTION

The global market demand for Halal products and services gives significant impact to the growth of
the domestic Halal food industry in Malaysia. According to Dato’ Jamil (2008) the CEO of Halal
Industry Development Corporation Malaysia, the global market for potentially Halal Products in 2005

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Value Chain of Halal Certification System: A Case of the Malaysia Halal Industry
European and Mediterranean Conference on Information Systems 2009 (EMCIS2009)

July 13-14 2009, Crowne Plaza Hotel, Izmir

was USD2.77 trillion. In addition, Mariam (2006) stated that the international scenario is one of the
factors that lead to the global increase in Halal food demand. Due to this potential growth, the
Malaysian government had in its Budget 2005 allocated RM10 million for the purpose of business
planning research, technology and marketing development, improving productivity and quality of
Halal certification and promoting Malaysia as the world producer of Halal products and services
(Nurliza, 2006). In reality, the huge demand of Halal food products will lead to increase supply for
Halal certificate and logo.

A review of previous literature identifies that the Halal certification is often fraught with issues and
challenges (Mariam, 2006; Abdelsalam El-Farra, 2009). Shahidan and Md Nor Othman (2006)
identified issues and challenges on the marketing Halal products and services in Malaysia. The main
challenges identified were (1) the lack of enforcement by the Department of Islamic Development
Malaysia (JAKIM), (2) lack of assistance given to Halal certification body by the related authority, (3)
lack of collaboration amongst the Halal certification authority and (4) slow process of issuance Halal
certification and logo. In line with these issues, Ahmad Hishamuddin (2007) also highlighted four
problems in the Halal certification process handled by JAKIM. The four problems were (1) data losses
or misplaced, (2) unreliable and out-dated e-halal database, (3) lack of integrated Halal information
and (4) lack of JAKIM enforcement capacity and activities. In addition, Hayati et. al. (2008) stated
that Halal issues such as abusing of Halal logo and Halal certification expiry were also the major
challenge for Malaysia.

This study was conducted to provide an understanding of Halal certification system in Malaysia and to
identify the issues on the operational of Halal certification. The results of this study reveal (1) the
related agencies and acts of Halal certification system, (2) the current state of Halal Certification and
(3) the issues of Halal certification system in Malaysia. An extensive literature review was conducted
at the early stage of the research. To further understanding the issues, a value chain analysis approach
was adapted in this study. In this value chain analysis, semi-structured interview was conducted to
determine the Halal certification process, actors, information and so forth. This paper is divided into
four main sections. The overview of Halal certification system in Malaysia is discussed in the first
section follow by the research methodology in the second section. Subsequently, the results of this
study are presented and discussed in section three. Lastly, the conclusion of this work is drawn in
section four of this paper.

2 A BRIEF OVERVIEW OF HALAL CERTIFICATION SYSTEMS

2.1 Halal Certification and Logo

The basic principles of Halal certification are Halal (permissible) and Thoyyibban (wholesome) taken
from Al-Quran, verse 168 Surah Al-Baqarah. Halal is an Arabic word which means allowed or
permitted according to shariah (Islamic) law (Lokman, 2001; Shaikh Mohd, 2006). On the other hand,
Thoyyibban means good quality, safety, cleanliness, nutritious and authentic (Shaikh Mohd, 2006,
Mariam, 2006). Halal and Thoyyibban themselves, portray the symbol of intolerance in the hygiene,
safety and quality. The Halal certification is issued based on the basic principles and procedures that
the products must be good, safe and fit to consume.

Singapore, Thailand and Indonesia are among the countries that have their own Halal certification
body. For instance, Mohamad Sadek (2006) stated that Singapore started their Halal certification
services in 1972 that managed by Majlis Ulama Islam Singapura (MUIS). MUIS is responsible in

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Value Chain of Halal Certification System: A Case of the Malaysia Halal Industry
European and Mediterranean Conference on Information Systems 2009 (EMCIS2009)

July 13-14 2009, Crowne Plaza Hotel, Izmir

regulatory function in Halal certification. Mohamad Sadek (2006) also identified three government
agencies that collaborate with MUIS in Halal certification and enforcement, namely Food Control
Department, Ministry of Environment; Agro-Veterinary Authority, Ministry of National Department
and Commercial Crime Department, Ministry of Home Affairs. Further, according to HDC, source
from Halal Standard Institute of Thailand, the Central Islamic Committee of Thailand is responsible
for Halal certification of slaughtering houses, process food and services. This Committee, in
cooperation with the Thai government producing Halal food standard and issuance the Halal symbols.
The Halal certificates and logos are issued by the Committee that complied with the Islamic
requirements.

2.2 Halal Certification System in Malaysia

In Malaysia, the Halal certification and logo are issued by a body that is authorised by the Malaysian
government. The government controls the system with support from multi-agencies that lead by
Department of Islamic Development Malaysia (JAKIM). JAKIM is a body that plays a significant role
in Halal certification efforts in Malaysia. Since 1994 until 2008, JAKIM is an authorise body to
handle the certification process (JAKIM, 2008). Besides, the State Islamic Religious Department
(JAIN) and State Islamic Religious Council (MAIN) have the authority to issue the Halal certificates
and logos for domestic market (JAKIM, 2008). The Halal certification is issued according to three
categories of application. The three categories are 1) Product/ Consumer Good, 2) Food Premise and
3) Slaughter House/ Abattoir. Additionally, the premise inspection in terms of the product processing,
handling, storage, equipment and distribution is mandatory procedure before the Halal certificate is
approved. The Halal certification will be issued if this basic principle and procedure are complied and
revoked if not complied.

To date, JAKIM is no longer responsible for issuing the Halal certification. In April 2008, the
government has appointed Halal Industry Development Corporation (HDC) as a body to handle local
and international Halal certification process (HDC Vibe, 2008). HDC is a private company wholly-
owned by the Malaysian government. It was established in 2006 to facilitate the Malaysian’s Halal
hub project. According to Bernama (2008), quoting Datuk Dr Ahmad Zahid Hamidi the Minister in
the Prime Minister’s Department, stated that the transformation from JAKIM to Halal Industry
Development Corporation (HDC) was to help better coordination, to increase the efficiency of the
Halal certification processes and to avoid international confusion. This would help position Malaysia
as a global Halal hub center by 2010.According to Ahmad Shahrul (2008), until October 15, HDC had
successfully certified 637 companies which 627 was local companies and 10 for international
companies.

3 RESEARCH METHODOLOGY

3.1 Research aims and objectives

The aim of this study are to demonstrate an understanding of the Halal certification system in
Malaysia and highlighting issue in the Halal certification process using a value chain analysis
perspective. This study will focus on the process, information flows and actors involved in the Halal
certification process. This study attempts to generate findings that important in developing Halal
Ecosystem and also provide motivation for researcher to resolve the issues by providing more focus in
niche area.

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Value Chain of Halal Certification System: A Case of the Malaysia Halal Industry
European and Mediterranean Conference on Information Systems 2009 (EMCIS2009)

July 13-14 2009, Crowne Plaza Hotel, Izmir

3.2 Research design

In this study, the HDC is taken as a case study of the Halal certification system because it has vast
experienced in certifying domestic and international Halal food products. Moreover, HDC has been
appointed as the authorised body by the Malaysian government to handle the local and international
Halal certification process. In this study, the value chain analysis approach is adapted. The summary
of the research design is shown in Figure 1.

Review of literature and the Halal organisation/ authority websites

Conduct interviews with the experts on Halal certification process

Mapping of individual roles along the process

Develop overall value chain of Halal certification

Identify the value chain of Halal certification issues

Figure 1. Research design

Stage one: review of literature and the Halal organisation/ authority websites
In this stage, the Halal manual procedures, Halal Malaysian Standards, articles from the newspapers,
magazines, journals, brochures and slides presentation were reviewed in order to gain the
understanding of the Halal certification systems in Malaysia. The related authority websites such as
JAKIM, HDC and Ministry of Domestic Trade and Consumer Affairs (KPDNHEP) were also
reviewed. The details are simplified in Table 1 below.

Construct Descriptions Author(s) / Websites


Halal Manual Procedure of Halal Certification Department of Islamic Development Malaysia ( JAKIM)
Constituent Malaysia (2005)
Malaysian Standard Halal Food – Malaysian Standard Department (2004)
Production, Preparation, Handling and
Storage
MS1500:2004 A Testament of Excellence Remi Yahya-Ishmael (2005a)
Status and Power. http://www.malaysiamonarchy.org.my/portal_bi/rk2/rk2.p
hp [Online]
Halal Halal Gadget Yaakob Che Man (2005)
Certification Modelling the Manufacturers Self Evaluation Khairil, A.Y., Mardziah, H. and Nor Laila, M.N.(2006)
Tools Support System for Halal Certification
Halal Halal Integrity and Industry Development: Jamil Bidin (2008)
Marketing The Global Outlook
Visibility of Halal Supply Chains Marco Tieman (2007)
Halal Perspectives Understanding the Abdalhamid Evans (2005a)
Muslim Market

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Value Chain of Halal Certification System: A Case of the Malaysia Halal Industry
European and Mediterranean Conference on Information Systems 2009 (EMCIS2009)

July 13-14 2009, Crowne Plaza Hotel, Izmir

A Global Product in a Global Market Zarina Nalla, Shareem Amry and Remi Yahya-ishmael
(2005)
All Geared Up for Halal Hubs Hayati Hayatudin (2004)
Muslims and the Halal Standard Zulkefli Mohamad (2005)
The Halal Agenda Hayati Hayatudin (2005a)
Malaysia’s 2006 Budget Allocates More For Juana Jaafar (2005)
Developments Important to the Halal
Industry
Signposts AbdalHamid Evans (2006)
European Retailer Go Halal Kamarul Aznam Kamaruzaman (2006a)
Halal Process Pensijilan Halal Mariam Abd Latif (2008)
Halal Animal Feed: The Beginning of the Hayati Hayatudin (2005b)
Halal Process
Halal Industry within Islamic Principles: A Mohammad Hashim Kamali (2008a)
Shari’ah Perspective on Halal and Haram
Part 1. Understanding the Parameters of
Halal and Haram.
From Halal to Haram MarcoTieman (2006)
Harmonising Halal Ahmad Robin Wahab (2004)
Halal A Market in the Making Hayati Hayatudin (2005c)
Halal Organic the Next Wave? AbdalHamid Evans (2005b)
Halal, Kosher and the USA Kamarul Aznam Kamaruzaman (2006b)
Port of Rotterdam’s Halal Venture Jumaatun Azmi (2006)
Quality Assurance in Halal Food Hayati, A.T., Khairul Anuar, M.A. and Khairur Rijal, J.
Manufacturing in Malaysia: A Preliminary (2008).
Study
Get Certified Che Hassan Pahmi Che Mamat (2005)
Halal Issues Current Issues on Halal Food Mariam Abd Latif (2006)
Food and Technological Progress an Islamic Shaikh Mohd, S.M.S. and Azrina, S. (2006)
Perspective
Halal Products Consumerism, Technology Lokman, A.R. (2001)
and Procedures
Community Participation and Empowerment: Ahmad Hishamuddin. (2007)
An Approach for JAKIM Halal Verification
and Feedback Mechanism
Muslims’ Awareness of Halal in the Age of Irfan Sungkar (2008a)
Globalisation
The Rising Importance of the Food Service Irfan Sungkar (2008b)
Sector
Marketing of Halal Products The Way Saad Al-Harran & Patrick Low (2008)
Forward
Halal Agency Halal certification body and Halal Authority HDC websites: http://www.hdcglobal.com
in Malaysia. JAKIM website: http://www.jakim.gov.my
Ministry of Domestic Trade and Consumer Affairs
(KPDNHEP) website: http://www.kpdnhep.gov.my
Ministry of Health (MOH) website:
http://www.moh.gov.my
Ministry of International Trade and Industry (MITI)
website: http://www.miti.gov.my
Understanding the Department of Veterinary Jumaatun Azmi (2005).
Services, Malaysia.
FOA Cultivating a New Farming Culture Remi Yahya-Ishmael (2005b)
Table 1. Data Collection

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Value Chain of Halal Certification System: A Case of the Malaysia Halal Industry
European and Mediterranean Conference on Information Systems 2009 (EMCIS2009)

July 13-14 2009, Crowne Plaza Hotel, Izmir

Stage two: Conduct interviews with the experts in Halal certification process
The semi-structured interviewed was conducted based on one-to-one basis. The framework that was
used to guide the interview process was based on adapted work of Porter (1985). The three personals
were considered experts in the Halal certification process as they were credible and have been given
an authority by the Malaysian government. The experts profile is shown in Table 2.

Name Designation Proficiency


Respondent X  Vice-President of Halal Integrity HDC  Food Technical/Technology
 Former Principal Assistant Director (Research and Evaluation)  Food Service Management
Halal Hub Division (JAKIM)
Respondent Y  Technical Auditor of HDC Certification Department  Food Sciences
Respondent Z  Customer Relationship Officer HDC Certification Department  Shariah
 Shariah Auditor of HDC Certification Department
Table 2. Interview personals

The open-ended questions such as how, what, when, where, and why were used in this study. This will
allow the respondents to answer it in their own words and let them feel comfortable. The open-ended
questions are used as the statistical validity is not a prime objective. The questions listed below were
used as guideline during the interview.
The questions asked in the interview are as follows:

 What are the primary processes of Halal certification?


 Who are involves in the Halal certification process and what are their roles?
 What technology involves in the Halal certification process?
 How long is the duration for Halal certification approval?
 What are the problems identified in the Halal certification system?

Stage three: Mapping individual roles along the process


The starting point was the processes, individuals, roles, information and technology that have been
used in the Halal certification process were tabulated. These data were collected during the
interviewed. However, due to the limited spaces, the tabulated data is not provided in this paper.

Stage four: Develop overall value chain of Halal certification


The tabulated data is then being used to construct the Value Chain of Halal Certification. The value
chain of Halal certification was developed based on the three main elements which are (1) actors, (2)
information and (3) processes. The overall value chain of Halal certification is simplified in Figure 2.

Stage five: Identify the value chain of Halal certification issues


Based on the interviews with the experts, the issues of Halal certification process along the process
were identified. The issues are discussed in section 4.

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Value Chain of Halal Certification System: A Case of the Malaysia Halal Industry
European and Mediterranean Conference on Information Systems 2009 (EMCIS2009)

July 13-14 2009, Crowne Plaza Hotel, Izmir

4 DATA ANALYSIS AND FINDINGS

4.1 Halal Certification Related Agencies and Acts in Malaysia

The government is committed in supporting the Halal industry in Malaysia. The government controls
the Halal food through multi-agency approach lead by JAKIM. Ahmad Hishamuddin (2007) stated
five main agencies that involved in the Halal food control. As the Halal industry in expanding, the
number of agency involved is also increased. From the literature review, the agencies involved are not
only responsible to Halal Food Control but also in promoting, marketing, financial support, research
and development and so forth. Table 3 shows part of the related agencies and acts that relevant to the
Halal food industry.

Agency Functions Acts


Department of Islamic Development Provide fatwa and shariah matters  Not Introduced
Malaysia (JAKIM)
Ministry of Agriculture and Agro- Responsible for animal health and abbotairs  Animal Rules 1962
Based Industry (MOA) Monitoring Halal certificate
Ministry of Health (MOH) Responsible for food safety  Food Act 1983 (Act 281)
and Food Regulations 1985
Ministry of Domestic Trade and Provide enforcement and monitoring  Trade Descriptions (Use of
Consumer Affairs (KPDNHEP) programme. Expression ‘Halal’) Order
1975.
 Trade Descriptions
(Marking of Food) Order
1975.
Chemistry Department Responsible for food analysis  Food Act 1983 (Act 281)
and Food Regulations 1985
State Islamic Religious Department Monitoring and issues Halal certificate for  Not Introduced
(JAIN) / State Islamic Religious domestic markets
Council (MAIN)
Local Universities and Research Provides R&D and courses in Halal matters.  Not Introduced
Institute
Department of Veterinary Services Provides consultancy and advisory services  Animal Rules 1962
(DVS) on Halal livestock, monitoring and
enforcement, issues export permit and
veterinary health certificate.
Ministry of Trade and Industry (MITI) Formulates strategies and provides incentives  Not Introduced
to encourage trade and investment in Halal
products and services.
Standards and Industrial Research Provides R&D for Halal in areas of advance  Not Introduced
Institute of Malaysia (SIRIM) material and advance manufacturing
Malaysian Agricultural Research and Provides R&D in Halal food processing  Not Introduced
Development Institute (MARDI) technology and technological development.
Table 3. Related Agency and Acts (Adapted from Ahmad Hishamuddin (2007), HDC (2008)
and JAKIM (2005))

4.2 Halal Certification Value Chain

In general, value chain is a set of processes a firm uses to create value for its customer (Alter, 2002).
Value chain can also be defined as a systematic way to divide a firm into its discrete activities and can
be used to examine how the activities in a firm are and could be grouped (Porter, 1985). In this study,
the value chain is constructed based on a standard format with the three elements showing the

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Value Chain of Halal Certification System: A Case of the Malaysia Halal Industry
European and Mediterranean Conference on Information Systems 2009 (EMCIS2009)

July 13-14 2009, Crowne Plaza Hotel, Izmir

interactions between the (1) processes, (2) information and (3) actors. These elements are particularly
important in highlighting the operational issues.

4.2.1 Processes
Generally, the Halal certification process is divided into five steps which are (1) Application/
Document Approval, (2) Premise Inspection, (3) Panel Committee/ Appeal Committee, (4) Issuance of
Halal Certification and (5) Monitoring and Enforcement. The process is not the problem, but the
implementation of the task at each process will create the problem if the procedures are disgruntled.
For instance, the process will delay if the payment for certification fee is not received and therefore the
premise inspection will not be conducted. On the other hand, the result of application and supporting
documents verification by the Application Processing Officer may not be enough in the Auditors
perspective. They may require further clarification during the premise inspection. It seems that, the
Halal certification process is relying on the information and actors in order to speed up the process. In
line with this, Khairil Anwar et. al (2006) suggested the Manufacturers Self Evaluation Support
System (MAHSESS) that potentially improved the Halal certification process. MAHSESS is a web-
based information system that expected to help the manufacturers to carry out the self evaluation on
the halal status of their products before submitting the application. This system is also expected to
provide suggestion on alternative halal ingredients from the certified manufacturers.

4.2.2 Information
Information is significant to the Halal certification process. Without reliable information, the decision
making may be uncertain. Additional information is required in applying the Halal certification. The
additional information are:
 Company profile,  HACCP, ISO, GHP, GMP, TQM
certificate (if applicable),
 Registration of company,
 Map of premise location/factory,
 Name and information of product/menu
for verification,  ID and offer letter for Halal Executives,
 Ingredients,  ID and offer letter for Muslim staffs
(Production section),
 Name and address of producer/ingredient
supplier,  Import permit from Department of
Veterinary Services,
 Halal status of ingredients and their Halal
certifications or product specifications for  Licence from Ministry of Health (Drugs
critical ingredients (as appropriate), and Cosmetics), and
 Type of packaging material;  List of barcode product.
 Processing and production procedures,

These information (supporting documents) should be submitted by the applicants together with the
application form. The supporting documents are applicable based on their application category. For
example, the license from Ministry of Health for drugs and cosmetics is not applicable for the food
products category.

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Value Chain of Halal Certification System: A Case of the Malaysia Halal Industry
European and Mediterranean Conference on Information Systems 2009 (EMCIS2009)

July 13-14 2009, Crowne Plaza Hotel, Izmir

4.2.3 Actors
In this study, the actor is referring to the individuals who are involved in the Halal certification
process. In general, there are six actors with different roles involved in the Halal certification process.
They are as shown in Table 4 below. They are responsible to the specific tasks in the Halal
certification process.

Actors Responsibilities
Administration Staff  Handling application form, supporting documents and certification fee.
Application Processing Officer  Examine and verify the application form and supporting documents
(Technical and Shariah)
Auditors  Examining the product ingredients based on technical and shariah perspectives.
(Technical and Shariah)  Premise inspection, and
 Preparing inspection report.
 Committee of Internal Pre-meeting Halal certification
Head of Units/ Managers of Halal  Committee of Internal Pre-meeting Halal certification
Certification Department,  Pre-approval of Halal certification,
 Presenting the Halal applications to the Halal Certification Panels.
Halal Certification Panels  Decision making in Halal approval/ rejection
(Technical and Shariah), and
Secretariat of Halal Certification  Organising the Halal Certification Panel Meeting,
 Issue Halal certification
Table 4. Actors of Halal certification process

Using the data collected from the semi-structured interviews and literature review, the current state
map of the Halal certification process is constructed. The map is an effective technique for
summarising and presenting the key features of a process. We adapted the process activity mapping
technique described by Hines and Rich (1997) in constructing the current state map of the Halal
certification process. A simplified version of the current state of the whole chain is shown in Figure 2.
The Halal certification value chain provides the understanding of Halal certification system by
identifying the potential continues improvement in the operational of Halal certification.

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Value Chain of Halal Certification System: A Case of the Malaysia Halal Industry
European and Mediterranean Conference on Information Systems 2009 (EMCIS2009)

July 13-14 2009, Crowne Plaza Hotel, Izmir

Application / Document Premise Inspection Panel Committee/ Issuance of Halal Monitoring and
Approval Appeal Committee Certification Enforcement

Application Receiving Prepare Inspection Internal Pre-meeting Halal Prepare Halal


Scheduling Certification Certification
Compile Application &
OPERATIONAL

Supporting Document Revised application and Halal Certification Panel Send Halal
supporting document meeting Certification

Verified Application & Premise Inspection Halal Certification


Supporting Document Approval
Issue general / non-
conformant report
Issue certification fee

Write online report

Application form, Supporting documents, Certification fee, Inspection Inspection report, Application form, Supporting document, List of Certify
DATA

scheduled Halal certificate Manufacturers,


Slaughtering house/
Abbatoirs

E-mail, Fax, Telephone


e-Halal information systems
Note:
Administration Officer Senior Auditors Auditors & Head of Units
Secretariat Halal
Technical Auditor & Shariah Auditor External Panels Certification
Application Processing Officer

Figure 2. Current state map: Value Chain of Halal Certification

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Value Chain of Halal Certification System: A Case of the Malaysia Halal Industry
European and Mediterranean Conference on Information Systems 2009 (EMCIS2009)

July 13-14 2009, Crowne Plaza Hotel, Izmir

4.3 Halal Certification Issues

There are two issues arise in the Halal certification system. The issues are (1) operational inefficiency
and (2) Halal governance. Efficiency is an internal view focusing on how well the resources are used
within a worksystem to produce a particular output (Alter, 2002).
4.3.1 Operational Inefficiency

In the study, we look into the capability of the actors to use the resources in producing the Halal
certificate within the time frame. The result reveals that the operational inefficiency of Halal
certification process is due to two factors which are (1) Applicants and (2) Internal. The results are
tabulated in Table 5.

Applicants Internal
 Lack of understanding of the Halal  Lack of expertise as new staffs with little experience of the system
procedures contribute to the slow processing and without a tight coordination
will minimise the number of Halal certificate approval.

 Delay in submitting the supporting  Unsystematic filing system also contribute to the inefficient
documents operational.
 Delay in making payment of certification  Premise inspection may require more than a day to be completed
fee especially for the multi-national industry and hotels.

 Unaware of the acknowledgement that has  Delay in receiving lab test result.
been sent to them through the e-mail or e-
halal information system.
Table 5. Operational Inefficiency

This findings support the issues that have been highlighted by Shahidan et. al. (2005) and Ahmad
Hishamuddin (2007). In sum, the applicants and the internal actors play major roles to make the
certification process efficient. It is suggested that with a good understanding, cooperation and training
for both parties, the Halal certification process could be improved and efficiency could be achieved.

4.3.2 Halal Governance

The second issue of Halal certification is Halal governance. According to United Nations Economic
and Social Commission for Asia and the Pacific (UNESCAP), governance can be defined as a process
of decision-making and it is by which decisions are implemented (or not implemented). In Malaysia,
Halal matters are under the Islamic rule that is governed by states Rulers (Sultans), their consent is
compulsory to standardise the Halal matters in Malaysia. According to the Malaysia Federal
Constitution Article 3, the state Ruler is the Head of the religion of Islam in his state declared by the
State Constitution (Status and Power, 2009). Therefore, the federal government has no authority to
force the states to follow whatever decision regarding Islamic matters that are made at national level.
This situation may lead to difficulty in implementation of decision making in Halal matters. On the
other hand, the lack of enforcement and no comprehensive Halal Act also contributed to this issue.
The certification body has no authority in Halal enforcement matters and the enforcement power is
given to the related agencies that have been simplified in Table 3.It could be suggested that the
standardisation of Halal decision is required in order to avoid the confusion among the Muslim. In
addition, the cooperation and collaboration within the related agencies and Halal certification body is
highly recommended in order to improve the Halal enforcement in Malaysia.

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Value Chain of Halal Certification System: A Case of the Malaysia Halal Industry
European and Mediterranean Conference on Information Systems 2009 (EMCIS2009)

July 13-14 2009, Crowne Plaza Hotel, Izmir

5 CONCLUSION

The global recognition of the Halal certification is a credit to the Halal industry in Malaysia. An
efficient Halal certification is needed to support the reputable image of Malaysia as the Halal food
producers. In line with this, Mohd Adly (2005) stated that the Malaysia government had allocated
RM10 million for the development and improvement of Halal product and process, the acquisition of
certifications and standards and also promotion of Halal products. This study has led to several
important conclusions. In particular, Halal certification system seems to be on interest to the vast
majority of Halal researcher. From the extensive literature review, the agencies and acts that related to
Halal certification were identified. Specifically, eleven agencies and six Acts that were relevant to the
Halal food control were identified. Besides, this study established the value chain of Halal
certification in Malaysia. This finding is important to the future development of Halal Ecosystems in
Malaysia. Further research effort may reuse and extend the value chain of Halal certification presented
in this paper and the test of the suitability of this value chain within a different research context. It is
suggested that the value chain of Halal certification may help the researcher to determine the potential
improvement in the operational of Halal certification. The findings of Halal certification issues extend
the findings of the previous researcher on the Halal certification. This finding suggested the new issue
of Halal certification which is the Halal governance. Halal governance is considered problematic in
the Halal certification system in Malaysia, but it may not applicable to the other country. The reason
that contributed to this problem is due to the segregation of authority between federal government and
state government in the Parliamentary Democracy and Constitutional Monarchy systems implemented
in Malaysia. Moreover it should be stressed that, the findings are limited to the Halal certification in
Malaysia for food products category. Further research in this area is strongly recommended.

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